Correlation Between Hamilton MidSmall and Brompton North
Can any of the company-specific risk be diversified away by investing in both Hamilton MidSmall and Brompton North at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Hamilton MidSmall and Brompton North into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hamilton MidSmall Cap Financials and Brompton North American, you can compare the effects of market volatilities on Hamilton MidSmall and Brompton North and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Hamilton MidSmall with a short position of Brompton North. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hamilton MidSmall and Brompton North.
Diversification Opportunities for Hamilton MidSmall and Brompton North
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Hamilton and Brompton is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding Hamilton MidSmall Cap Financia and Brompton North American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brompton North American and Hamilton MidSmall is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Hamilton MidSmall Cap Financials are associated (or correlated) with Brompton North. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brompton North American has no effect on the direction of Hamilton MidSmall i.e., Hamilton MidSmall and Brompton North go up and down completely randomly.
Pair Corralation between Hamilton MidSmall and Brompton North
Assuming the 90 days trading horizon Hamilton MidSmall Cap Financials is expected to generate 1.17 times more return on investment than Brompton North. However, Hamilton MidSmall is 1.17 times more volatile than Brompton North American. It trades about 0.3 of its potential returns per unit of risk. Brompton North American is currently generating about 0.28 per unit of risk. If you would invest 3,411 in Hamilton MidSmall Cap Financials on September 2, 2024 and sell it today you would earn a total of 474.00 from holding Hamilton MidSmall Cap Financials or generate 13.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hamilton MidSmall Cap Financia vs. Brompton North American
Performance |
| Timeline |
| Hamilton MidSmall Cap |
| Brompton North American |
Hamilton MidSmall and Brompton North Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hamilton MidSmall and Brompton North
The main advantage of trading using opposite Hamilton MidSmall and Brompton North positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hamilton MidSmall position performs unexpectedly, Brompton North can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Brompton North will offset losses from the drop in Brompton North's long position.| Hamilton MidSmall vs. Brompton Global Dividend | Hamilton MidSmall vs. Global Healthcare Income | Hamilton MidSmall vs. Tech Leaders Income | Hamilton MidSmall vs. Brompton North American |
| Brompton North vs. BMO Canadian Dividend | Brompton North vs. BMO Covered Call | Brompton North vs. BMO Canadian High | Brompton North vs. BMO NASDAQ 100 |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Stocks Directory module to find actively traded stocks across global markets.
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